Fiscal 2018 first-quarter net sales of $1.35 billion increased 7.5% over
the $1.25 billion reported a year ago. First-quarter net income was up
3.2% to $116.4 million from $112.8 million in the year-ago period, and
diluted earnings per share of $0.86 were up 3.6% from $0.83 in the
fiscal 2017 first quarter. Income before income taxes (IBT) increased
4.6% to $155.3 million from $148.5 million in the fiscal 2017 first
quarter. RPM’s consolidated earnings before interest and taxes (EBIT)
increased 6.1% to $177.6 million from $167.4 million reported in the
fiscal 2017 first quarter.

“We derived significant benefits from the nine acquisitions made in
fiscal 2017, along with our selling, general and administrative (SG&A)
cost reduction actions taken last year. Rising raw material costs
negatively impacted gross profit margins. As a result, we instituted
price increases, which began to take effect late in the quarter. After
three years of foreign currency headwinds attributable to the
strengthening U.S. dollar, currency translation was essentially neutral
this quarter,” stated Frank C. Sullivan, RPM chairman and chief
executive officer.

First-Quarter Segment Sales and Earnings

The company’s industrial segment net sales increased 8.0%, to $729.8
million from $675.8 million reported a year ago, with 3.2% in organic
growth, while acquisitions added 4.3%. Foreign currency translation
increased sales by 0.5%. Industrial segment EBIT increased 0.4% to $91.5
million from $91.1 million in the fiscal 2017 first quarter.

“Our industrial segment results reflect a combination of higher raw
material costs, unfavorable product mix, higher distribution expense and
disappointing results from a struggling Latin America. Our European and
Canadian businesses performed very well in the quarter. North American
commercial construction markets, which have bolstered the industrial
segment’s performance over the past several years, have become a bit
choppy, with some areas performing well and others showing weakness. Our
businesses serving the oil and gas industries were down in the
mid-single digits, compared to double-digit declines over the past three
years. We expect sales at those businesses to turn positive in the
second half of this fiscal year,” stated Sullivan.

RPM’s consumer segment reported a 6.8% increase in sales to $427.1
million from $399.9 million in the fiscal 2017 first quarter. Organic
sales declined 1.2%, while acquisition growth contributed 8.1%. Foreign
currency translation reduced sales by 0.1%. Consumer segment EBIT
improved 3.5% to $72.6 million from $70.1 million in the fiscal 2017
first quarter.

“Our growth in consumer is being driven by Touch n’ Foam and SPS, both
of which were acquired in the third quarter of fiscal 2017. Even though
the residential housing market remains solid, overall organic growth in
the U.S. paint category, across the industry, has been softer over the
last couple of quarters,” stated Sullivan.

RPM’s specialty segment had sales growth of 6.9%, to $188.5 million from
$176.3 million in the fiscal 2017 first quarter. Organic growth
contributed 3.0%, while acquisition growth was 4.1%. Foreign currency
translation was a negative 0.2%. Specialty segment EBIT was up 8.9% to
$33.0 million from $30.4 million in the fiscal 2017 first quarter.

“Many of our specialty business units had solid performance in the
quarter, led by a surge at our restoration equipment unit, which was
partially due to immediate response efforts to Hurricane Harvey. Our
powder coatings, wood finishes and wood preservatives businesses also
performed well in the quarter. The segment was able to more than offset
higher raw material costs through SG&A savings resulting from actions
taken in the prior fiscal year,” Sullivan stated.

Cash Flow and Financial Position

During the fiscal 2018 first quarter, cash used from operations was
$26.1 million compared to cash provided by operations of $6.5 million a
year ago. Capital expenditures were $17.5 million in the quarter,
compared to $17.0 million in the year-ago period.

Total debt at August 31, 2017 of $2.12 billion compares to $2.09 billion
at May 31, 2017 and $1.66 billion at the end of last year’s first
quarter. Net (of cash) debt-to-total capital was 54.7%, versus 50.5% at
the end of last year’s first quarter and 54.8% at the end of the prior
fiscal year. Liquidity, including cash, was $1.0 billion, compared to
$976.0 million a year ago and $1.15 billion at May 31, 2017.

Business Outlook

“Sales during the first quarter were in line with our expectations and
revenue growth was very balanced across all three segments. We believe
that the severe hurricane season will initially hinder sales in the
second quarter, but provide higher than originally expected sales in the
back half as communities in the devastated Texas, Florida and Caribbean
regions begin the rebuilding process. On the raw material front, the
hurricanes will perpetuate the already higher raw material cost
environment well into the second quarter before moderating. Our price
increase actions should offset a large portion of the raw material
increases. Additionally, we continue to incur expenses relating to the
ongoing integration of Flowcrete and Euclid into the newly formed Euclid
Group. We are also very focused on driving improved operating leverage
throughout the entire industrial segment, which will involve future
re-alignments to generate additional cost savings and efficiencies. As a
result of these factors across our businesses, our sales growth guidance
for the balance of fiscal 2018 in our industrial and consumer segments
is in the mid-single-digit range and specialty in the low- to
mid-single-digit range. We are maintaining our full-year EPS guidance of
$2.85 to $2.95 per diluted share,” stated Sullivan.

Webcast and Conference Call Information

Management will host a conference call to discuss the quarter’s results
beginning at 10:00 a.m. EDT today. The call can be accessed by dialing
888-771-4371 or 847-585-4405 for international callers. Participants are
asked to call the assigned number approximately 10 minutes before the
conference call begins. The call, which will last approximately one
hour, will be open to the public, but only financial analysts will be
permitted to ask questions. The media and all other participants will be
in a listen-only mode. The call may also be accessed via the RPM website
at www.RPMinc.com.

For those unable to listen to the live call, a replay will be available
from approximately 12:30 p.m. EDT on October 4, 2017 until 11:59 p.m.
EDT on October 11, 2017. The replay can be accessed by dialing
888-843-7419 or 630-652-3042 for international callers. The access code
is 45605381. The call also will be available both live and for replay,
and as a written transcript, via the RPM web site at www.RPMinc.com.

For more information, contact Barry M. Slifstein, vice president –
investor relations, at 330-273-5090 or bslifstein@rpminc.com.

Use of Non-GAAP Financial Information

To supplement the financial information presented in accordance with
Generally Accepted Accounting Principles in the United States (“GAAP”)
in this earnings release, we use EBIT, a non-GAAP financial measure.
EBIT is defined as earnings (loss) before interest and taxes. We
evaluate the profit performance of our segments based on income before
income taxes, but also look to EBIT as a performance evaluation measure
because interest expense is essentially related to acquisitions, as
opposed to segment operations. For that reason, we believe EBIT is also
useful to investors as a metric in their investment decisions. EBIT
should not be considered an alternative to, or more meaningful than,
income before income taxes as determined in accordance with GAAP, since
EBIT omits the impact of interest in determining operating performance,
which represent items necessary to our continued operations, given our
level of indebtedness. Nonetheless, EBIT is a key measure expected by
and useful to our fixed income investors, rating agencies and the
banking community all of whom believe, and we concur, that this measure
is critical to the capital markets' analysis of our segments' core
operating performance. We also evaluate EBIT because it is clear that
movements in EBIT impact our ability to attract financing. Our
underwriters and bankers consistently require inclusion of this measure
in offering memoranda in conjunction with any debt underwriting or bank
financing. EBIT may not be indicative of our historical operating
results, nor is it meant to be predictive of potential future results.
See the financial statement section of this earnings release for a
reconciliation of EBIT to income before income taxes.

Forward-Looking Statements

This press release contains “forward-looking statements” relating to our
business. These forward-looking statements, or other statements made by
us, are made based on our expectations and beliefs concerning future
events impacting us, and are subject to uncertainties and factors
(including those specified below) which are difficult to predict and, in
many instances, are beyond our control. As a result, our actual results
could differ materially from those expressed in or implied by any such
forward-looking statements. These uncertainties and factors include (a)
global markets and general economic conditions, including uncertainties
surrounding the volatility in financial markets, the availability of
capital and the effect of changes in interest rates, and the viability
of banks and other financial institutions; (b) the prices, supply and
capacity of raw materials, including assorted pigments, resins, solvents
and other natural gas- and oil-based materials; packaging, including
plastic containers; and transportation services, including fuel
surcharges; (c) continued growth in demand for our products; (d) legal,
environmental and litigation risks inherent in our construction and
chemicals businesses and risks related to the adequacy of our insurance
coverage for such matters; (e) the effect of changes in interest rates;
(f) the effect of fluctuations in currency exchange rates upon our
foreign operations; (g) the effect of non-currency risks of investing in
and conducting operations in foreign countries, including those relating
to domestic and international political, social, economic and regulatory
factors; (h) risks and uncertainties associated with our ongoing
acquisition and divestiture activities; (i) risks related to the
adequacy of our contingent liability reserves; and (j) other risks
detailed in our filings with the Securities and Exchange Commission,
including the risk factors set forth in our Annual Report on Form 10-K
for the year ended May 31, 2017, as the same may be updated from time to
time. We do not undertake any obligation to publicly update or revise
any forward-looking statements to reflect future events, information or
circumstances that arise after the date of this release.

CONSOLIDATED STATEMENTS OF INCOME

IN THOUSANDS, EXCEPT PER SHARE DATA

(Unaudited)

Three Months Ended

August 31,

2017

2016

Net Sales

$

1,345,394

$

1,252,063

Cost of sales

773,386

700,021

Gross profit

572,008

552,042

Selling, general & administrative expenses

394,409

384,085

Interest expense

26,773

22,778

Investment (income), net

(4,453

)

(3,838

)

Other (income) expense, net

(5

)

542

Income before income taxes

155,284

148,475

Provision for income taxes

38,381

35,081

Net income

116,903

113,394

Less: Net income attributable to noncontrolling interests

487

625

Net income attributable to RPM International Inc. Stockholders

$

116,416

$

112,769

Earnings per share of common stock attributable to

RPM International Inc. Stockholders:

Basic

$

0.87

$

0.85

Diluted

$

0.86

$

0.83

Average shares of common stock outstanding - basic

131,236

130,600

Average shares of common stock outstanding - diluted

135,720

135,241

SUPPLEMENTAL SEGMENT INFORMATION

IN THOUSANDS

(Unaudited)

Three Months Ended

August 31,

2017

2016

Net Sales:

Industrial Segment

$

729,768

$

675,840

Consumer Segment

427,144

399,887

Specialty Segment

188,482

176,336

Total

$

1,345,394

$

1,252,063

Income Before Income Taxes (a):

Industrial Segment

Income Before Income Taxes (a)

$

88,902

$

89,266

Interest (Expense), Net (b)

(2,554

)

(1,837

)

EBIT (c)

$

91,456

$

91,103

Consumer Segment

Income Before Income Taxes (a)

$

72,368

$

70,088

Interest (Expense), Net (b)

(196

)

(3

)

EBIT (c)

$

72,564

$

70,091

Specialty Segment

Income Before Income Taxes (a)

$

33,167

$

30,504

Interest Income, Net (b)

120

153

EBIT (c)

$

33,047

$

30,351

Corporate/Other

(Expense) Before Income Taxes (a)

$

(39,153

)

$

(41,383

)

Interest (Expense), Net (b)

(19,690

)

(17,253

)

EBIT (c)

$

(19,463

)

$

(24,130

)

Consolidated

Income Before Income Taxes (a)

$

155,284

$

148,475

Interest (Expense), Net (b)

(22,320

)

(18,940

)

EBIT (c)

$

177,604

$

167,415

(a)

The presentation includes a reconciliation of Income (Loss) Before
Income Taxes, a measure defined by Generally Accepted Accounting
Principles in the United States (GAAP), to EBIT.

(b)

Interest income (expense), net includes the combination of interest
income (expense) and investment income (expense), net.

(c)

EBIT is defined as earnings (loss) before interest and taxes. We
evaluate the profit performance of our segments based on income
before income taxes, but also look to EBIT as a performance
evaluation measure because interest expense is essentially related
to acquisitions, as opposed to segment operations. For that reason,
we believe EBIT is also useful to investors as a metric in their
investment decisions. EBIT should not be considered an alternative
to, or more meaningful than, income before income taxes as
determined in accordance with GAAP, since EBIT omits the impact of
interest in determining operating performance, which represent items
necessary to our continued operations, given our level of
indebtedness. Nonetheless, EBIT is a key measure expected by and
useful to our fixed income investors, rating agencies and the
banking community all of whom believe, and we concur, that this
measure is critical to the capital markets' analysis of our
segments' core operating performance. We also evaluate EBIT because
it is clear that movements in EBIT impact our ability to attract
financing. Our underwriters and bankers consistently require
inclusion of this measure in offering memoranda in conjunction with
any debt underwriting or bank financing. EBIT may not be indicative
of our historical operating results, nor is it meant to be
predictive of potential future results.

About RPM

RPM International Inc. (NYSE: RPM) owns subsidiaries that are world leaders in coatings, sealants, building materials and related services. From homes to precious landmarks worldwide, their brands are trusted by consumers and professionals alike to protect, improve and beautify. Among its leading consumer brands are Rust-Oleum, DAP and Zinsser.

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